In the past year, Jeremy Tyler and I have written several posts on the Condominium Insurance Law and Property Insurance Coverage Law blogs about the increasing amount of litigation over policyholders’ rights to appraisal. Many of the cases have involved Citizens Property Insurance Corporation. It seems that other Florida insurers have followed suit in challenging appraisal. Generally speaking, appraisal is a form of alternative dispute resolution contained in some insurance policies intended to resolve the parties’ disagreement and set the amount of loss for a claim. The subject of much recent litigation in Florida is whether the policyholder complied with the insurance policy’s duties after loss. Insurers argue that if the policyholder has not complied with the post loss obligations, then appraisal is inappropriate. In this sense, some insurers have used the policy duties as a shield to appraisal.
The current paradox was revealed by Jeremy’s post; Litigating The Right To Resolve Disputes Without Litigation, from March 7, 2011. This reality becomes apparent with a simple review of current cases decided by appellate courts in Florida related to whether appraisal is ripe. The most recent case was a Leap Day opinion, United Property & Casualty Insurance Company v. Concepcion, 2012 WL 634099 (Fla. 3d DCA February 29, 2012).
Mr. Concepcion’s property was damaged by Hurricane Wilma. United acknowledged coverage for the loss and paid approximately $7,000 in 2005 for damages. In March 2009, Mr. Concepcion requested the claim to be reopened and produced an estimate of damages for $122,769.40. The policyholder requested an appraisal for the amount of loss. The insurer refused, and the policyholder later filed a breach of contract complaint against United. United responded that the policy duties after loss included the obligation to provide United with records and documents pertaining to the loss; submit to an examination under oath and sign it; and provide a sworn proof of loss within sixty days after United requested it. United alleged that Mr. Concepcion failed to comply with these post-loss obligations.
The policyholder filed a motion to compel appraisal. At the hearing, United contended that appraisal was premature, as Mr. Concepcion still had not provided United with the information it needed to evaluate his claim. Mr. Concepcion contended that he went to an examination under oath and that he did repairs with a neighbor, but he did not have any receipts. The trial court granted the motion to compel appraisal and stated in its order: “The Court has reviewed the motion to compel appraisal, any and all documents filed in support thereof and opposition thereto and the complete court file.”
United appealed. The Third District Court of Appeal noted that the policyholder’s attorney explained that the examination under oath transcript was not filed in the court docket prior to the hearing on the motion to compel appraisal. Importantly, the Court stated that the “EUO may have been a significant piece of evidence, among others, from which the trial court could have concluded that the insured complied with his post-loss obligations.” The Court overturned the trial court order and remanded the case for an evidentiary hearing on compliance with the policy duties after loss.
The Court explained that a trial court resolving a dispute over whether there has been compliance with policy duties after loss must conduct “an examination of the evidence.”
The transcript of the hearing on the motion to compel appraisal reflects that the trial court never reviewed any evidence on whether Concepcion complied with his post-loss obligations under the policy. The argument of counsel on this issue does not constitute evidence.